The Construction Industry Scheme (CIS) is a scheme created by HM Revenue & Customs (HMRC) for tax from contractors and subcontractors.
The scheme is designed to minimize tax evasion within the construction industry. Under CIS, contractors deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.
Contractors will need to provide standard information such as the company name, contact details, and the date of the first payday. Other information will also be required from the contractor such as unique taxpayer reference (UTR), NI number, and number of employers. Partnerships and limited companies will need to supply additional information. HMRC will then set up a contractor scheme for the business.
HMRC operates an extremely tough penalty regime for those within the CIS scheme. Contractors need to ensure that they keep not only their books and records up to date but also that they are not late in submitting returns or making payments of CIS tax deducted.
For more information on the Construction Industry Scheme,
please visit the official government website https://www.gov.uk/what-is-the-construction-industry-scheme.
Click the image on the right to view or download certification.